Video description:

Meet the manager: A man in business attire sits in an office. T. Rowe Price appears in the top right corner throughout the whole video. Upbeat music plays in the background through the whole video.

Video content:

Scott Berg from T. Rowe Price describes their approach to global equity investing.

Description: A text banner appears saying Meet the manager: T. Rowe Price. A man sits in an office in business attire. Then a text banner stating What are the advantages of the Global Growth Equity Strategy appears? 

Scott Berg: I think, really four things. I mean, the first one is it truly is the whole world in a single portfolio, and that's rarer than it sounds out there. 

Description: A text banner appears stating Scott Berg, Portfolio Manager, Global Growth Equity Strategy, T. Rowe Price. 

Scott Berg: The majority of global managers today are invested in about 15 countries. We're in more like 30. The second thing is that it really is leveraging this incredible world-class research platform. It's not a small boutique of people having global equities. It's reflecting the very best thinking of one of the deepest, most talented investment firms in the world. 

Scott Berg: The third thing is it has that durable quality growth focus, and what I like about that, it means the assets we own in general are ones where time is our friend, but with every passing year, their earnings are higher, their cash flows are higher, and we would expect them, on average, to be worth a bit more. And then the last thing is that portfolio construction is done in a way that is diversified, not just across countries but across sectors. So we're trying to be also thoughtfully aware of things we don't know and uncertainties that are just very difficult to play out, and really focus on the stock picking of the best companies within every sector, and across all those countries, so that we're not too beholden to any one or two big things that could go wrong. 

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Scott Berg: We try and fill the portfolio with durable, quality growth companies. And that sounds like a lot of jargon, but simplistically, the four things I really look for, as we're looking at companies to put in the portfolio… 

Description: A text banner appears stating Companies in “fertile” industries. 

Scott Berg: …firstly, companies that play in an attractive industry, what I call a fertile industry, where there's a large and growing market, and a large and growing profit pool for all the industry participants. 

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Scott Berg: Secondly, companies that are really special, that have a true competitive advantage within that fertile industry. Companies that are taking market share over time, that leads to so many other benefits of natural scale leverage, attracting better people, retaining better people, lower cost to capital over time. 

Description: A text banner appears stating A management team you can trust. 

Scott Berg: Thirdly, I want a management team that I really trust, and particularly that I trust on capital allocation. I think, for growth investing, one of the most important things is companies that have the ability to reinvest meaningful cash at good returns over time, and capital allocation is key. And if those first three things are true, a fertile industry, a special company, and a great management… 

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Scott Berg: …then we look at the valuation to say, "Do we think we can make 40 to 60% over two to three years, investing in this?" And that's looking at the free cash flow yields, the price earnings, et cetera. 

Description: A text banner appears stating Compared to other global managers, you have a higher exposure to global markets. Why? 

Scott Berg: Yeah, I think, particularly as a growth investor, when you look at the world today, emerging markets are 40% of global GDP and they're driving roughly two thirds of global GDP growth. And obviously, there's developed market companies that can address part of that opportunity set, but in a number of cases, the only way to address the real opportunity out there is directly in emerging markets. And so if we take the example of consumption today, the fastest growing part of global consumption is in Southeast Asia, in India, in China. And outside of certain sectors, like maybe luxury goods, where there are some Western companies that do that, some of them you really need to be domestically focused in doing that. Another great example would be banking. If you look at all of Europe and Japan, in near zero negative interest rate economies, it's just really tough to be a bank. And yet banks in India, Indonesia, places like that, eight, 9% interest rates, 10% plus nominal GDP growth, low debt levels, it's just a whole different thing when you can invest in those directly. The final thing I'd say about addressing a full opportunity set is, as an active investor, what I really love is finding things where there's inefficiency, where things are hard, and where we have a real advantage. And I think, at T. Rowe, the fact that we have such experience for so many years and so many people in these markets, and that there is a lot of information asymmetry, that there's a lot of emotion, a lot of fear and greed that play in those markets, means it's somewhere where it's great as an active manager to add alpha. 

Description: A text banner appears stating How important is T. Rowe Price’s research platform? 

Scott Berg: T. Rowe's research platform is absolutely critical and fundamental to the whole process of the global growth strategy. Trying to invest in the whole world is a hard problem. And I don't think about this as Scott Berg, or Scott and Hari trying to come up with the best portfolio. We think about it as if Scott and Hari can thoughtfully reflect the very best thinking of this entire T. Rowe Price organization, and I'm confident we're one of the top investment firms in the world. This is a really hard problem. We're going to take the best thinking of this great firm across the whole world, and we probably stand a good chance. And 10 years in, that's been the case, and that's what we plan to keep doing. 

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Description: Text appears onscreen stating The views expressed in this video are those of the speaker and do not necessarily reflect the view of Canada Life or any other party. Nothing in this video is intended to be legal, tax or financial advice. 

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